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Motion filed by Pete and Tony Youngs to force Russ Whitney to reveal his net worth 3

II. PLAINTIFFS' TRO MOTION

On June 19, 2003, Plaintiffs filed a Verified Complaint (the "Complaint") against the Whitney Defendants and Dearborn Financial Institute, Inc., the publisher of Millionaire Real Estate Mentor. The Complaint asserted only claims for copyright infringement, alleging that WEG's Foreclosure ATC manual and Millionaire Real Estate Mentor infringe eleven of Plaintiffs' purportedly copyrighted works. The Complaint fails to allege with any specificity what parts of what works have been infringed or what portions of the manual and the book are infringing, instead it simply makes conclusory allegations -- leaving it to the Court and Defendants to figure it out for themselves. The same day as the Complaint was filed, Plaintiffs also filed an Emergency Motion for Temporary Restraining Order (the "TRO Motion"), seeking, inter alia, to enjoin distribution of the manual and the book.
On June 23, 2003, the Court held a hearing on Plaintiff's TRO Motion and heard considerable evidence presented by Plaintiffs. The Court denied Plaintiffs' TRO Motion, holding that Plaintiffs were not likely to succeed on the merits of their copyright claim because, inter alia, they failed to demonstrate copying or substantial similarity between the expressive elements of their works and Defendants' allegedly infringing works. (See July 23, 2003 Order at 5-6).
Shortly thereafter, Plaintiffs dismissed without prejudice their claims against Dearborn.

III. PLAINTIFFS' AMENDED COMPLAINT

On August 12, 2003, Plaintiffs filed an Amended Verified Complaint (the "Amended Complaint"), which added David Keller as a defendant and added claims for fraud, negligent misrepresentation, and breach of contract against the Whitney Defendants, and asserted claims for copyright infringement and malicious interference with business and contractual relations against Mr. Keller. [FN1]

FN1. Plaintiffs also assert claims for "punitive damages for intentional conduct" (Count VI) and "complaint for expenses of litigation" (Count VIII). These claims are not substantive causes of action, and therefore are dependent upon Plaintiffs' substantive counts.

On March 24, 2002, Defendants filed a Motion for Judgment On The Pleadings (the "Motion to Dismiss"), requesting that the Court dismiss all of Plaintiffs' claims for failure to state a claim upon which relief can be granted. The Motion to Dismiss points out the numerous legal failings of Plaintiffs' Amended Complaint, including:
o That Plaintiffs' copyright claims are based on unprotected elements - i.e., ideas, facts, processes, methods and information that are not protected by copyright laws (Motion to Dismiss at 10-12);
o That the Amended Complaint fails to show substantial similarity between Plaintiffs' copyrighted works and Defendants' works, id. at 12-16;
o As to the fraud claim, that the Amended Complaint fails to allege a false statement, reasonable and detrimental reliance, monetary damage, or an actionable statement of present fact, id. at 16-21; and
o As to the malicious interference with contractual and business relations claims against Mr. Keller, that Mr. Keller was not a stranger to the alleged contract (according to Plaintiffs' allegations), id. at 21-23.
In short, Plaintiffs' complaint is a classic shotgun pleading, joining every defendant in every count and making merely conclusory allegations as to what each of the Defendants may have done. As set forth in Defendants' Motion to Dismiss, these claims are due to be dismissed.

IV. PLAINTIFFS' ATTEMPT TO LEVERAGE THEIR BASELESS CLAIMS INTO FAR REACHING AND INTRUSIVE DISCOVERY

Defendants have sought to use their conclusory and unsupported shotgun pleading as a ticket for far-reaching and intrusive discovery to leverage a settlement. Plaintiffs have served 20 written discovery requests (i.e., twenty separate documents each containing multiple interrogatories, requests for admission, and document requests), comprising roughly 200 pages and seeking truly voluminous discovery. Defendants have challenged Plaintiffs right to such discovery. (See Correspondence attached to Plaintiffs' Conference Certificate). For the time being, Plaintiffs are not pursuing a motion to compel on most of these items.
Plaintiffs are, however, seeking through their Motion perhaps the most intrusive and unwarranted of the information they have requested: details relating to assets and liabilities of the two individual defendants. In the interrogatories at issue, Plaintiffs have requested that Mr. Whitney:
o "Identify all of your assets currently valued at more that $2,500.00, giving a brief description and location of each asset" (Plaintiff Tony Youngs' First Request of Interrogatories to Defendant Russ Whitney, attached hereto as Exhibit 5, at No. 9); and
o "Identify all creditors to whom you are indebted in an amount in excess of $2,500, explaining the nature of each debt." Id. at No. 10.
Plaintiffs seek nearly identical information from Mr. Keller. (See Plaintiff Tony Youngs' First Request of Interrogatories to Defendant David Keller, attached hereto as Exhibit 6, at Nos. 9 and 10). Plaintiffs' interrogatories contain a lengthy definition of what Mr. Whitney and Mr. Keller must include to "identify" such assets and creditors. See id. at pp. 2-3; see also, Plaintiff Tony Youngs' Request for Interrogatories to Defendant Russ Whitney at pp. 2-3).
The parties engaged in a "meet and confer" process relating to these interrogatories, during which Plaintiffs conceded that "[w]hile we agree with your assessment of the case law that an identification of individual assets is not appropriate at this stage in the proceedings, Plaintiffs' claim for punitive damages does entitle them to discovery Defendants' net worth." (See January 28, 2004 letter from A. Smith to M. Cannady, attached hereto as Exhibit 7). Nonetheless, Plaintiffs have persisted in their "scorched earth" discovery strategy by filing the present Motion, seeking to compel Mr. Whitney and Mr. Keller to identify all of their individual assets and liabilities that exceed $2,500.
ARGUMENT AND CITATION OF AUTHORITIES

The Supreme Court in Hickman v. Taylor announced: "Limitations on the right of discovery inevitably arise when it can be shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass, or oppress the person subject to the inquiry ..." 329 U.S. 495, 67 S.Ct. 385 (1947). Moreover, fishing expeditions, disguised as Rule 26(b) discovery requests, are not allowed:
Fed. R.Civ.P. 26(b)(1) does not allow a party to 'roam in shadow zones of relevancy and to explore matter which does not presently appear germane on the theory that it might conceivably become so.' (Cit. omitted). The party seeking the discovery must make a prima facie showing that the discovery sought is more than merely a fishing expedition.
Evans v. Calise, 1994 U.S. Dist. LEXIS 6187, *3-4 (S.D.N.Y. 1994).

I. PLAINTIFFS HAVE FAILED TO OFFER EVIDENCE SUPPORTING THEIR CLAIMS FOR PUNITIVE DAMAGES

A. Federal Case Law Requires Evidentiary Support For Punitive Damages Claims Before Discovery Is Allowed

Federal courts often require evidentiary support for punitive damages claims before allowing discovery into a party's financials. See Wilson v. Gillis Advertising Co., 145 F.R.D. 578, 580-583 (N.D. Ala. 1993). [FN2] The rationale for requiring an evidentiary showing of supportive fact is to protect the party from excessively burdensome discovery and the disclosure of personal information. See Grawbowski v. Levin, 1990 WL 201320, * 1-2 (E.D. Pa. 1990) ("I decline at this time to compel answer to plaintiffs interrogatories seeking defendant's financial status. There is no actual information before this court as to whether plaintiffs fraud claim has genuine merit, thereby justifying an award of punitive damages. Without such threshold evidentiary showing, ...[the discovery requested] would be inappropriately intrusive into her personal affairs."); see also John Does I-IV v. Yogi, 110 F.R.D. 629, 633 (D.D.C. 1986) (noting "the Court will extend limited protection to discovery concerning defendant's financial status. This discovery is relevant, but should not be revealed until necessary to prove up punitive damages.").

FN2. The Wilson court noted that "there remains unresolved the issue of whether a defendant's financial worth becomes discoverable and/or admissible '(1) upon the pleading of a punitive claim, (2) only after some prima facie showing by plaintiff of defendant's liability, or (3) only after the trier of fact has determined defendant's liability for punitive damages.' (Cit. Omitted). There are federal courts in all three camps." 145 F.R.D. at 580. Applying federal and state law, the Wilson court went onto hold that Defendant's financials could only be disclosed after a finding of liability for punitive damages. See id. at 582.

B. State Case Law Requires Evidentiary Support For Punitive Damages Claims Before Discovery Is Allowed

Georgia Courts have interpreted O.C.G.A. §51-12-5.1 -- Georgia's punitive damages statute, upon which Plaintiffs rely -- to require an evidentiary showing that a factual basis exists for a punitive damages claim before a defendant's personal financial information is disclosed. See Holeman v. Burgess, 199 Ga. App. 61, 63, 404 S.E.2d 144, 147 (1991) (holding that a party is "not entitled to discover information concerning ... financial resources absent an evidentiary showing (by affidavit, discovery, or otherwise) that a factual basis" exists for the punitive damages claim). In Ledee, the Court reiterated this holding, ruling that "mere allegations in the complaint or otherwise and representations by counsel do not suffice; there must be an evidentiary showing." Ledee v. Devoe, 225 Ga. App. 620, 624, 484 S.E. 2d 344, 347-48 (1997). As Georgia Court of Appeals explained:
The potential for abuse created by such a discovery right [i.e., the right to discover a defendant's financial circumstances] is obvious. Indeed, it is conceivable that an unscrupulous plaintiff might use the threat of such discovery to extort an unwarranted settlement.
Holeman, 199 Ga. App. at 63. [FN3]

FN3. Plaintiffs cite Miller v. Crumbley, 249 Ga. App. 403, 548 S.E.2d 657 (2001) for the proposition that financial information is discoverable "upon even the slightest evidentiary showing." However, neither Miller nor Holeman support his proposition. In fact, the Holeman holding specifically recites case law requiring a prima facie showing of facts giving rise to punitive damage liability. See Holeman, 199 Ga. App. at 63, 404 S.E. 2d at 147.

C. Plaintiffs Have Failed To Present An Evidentiary Basis For Punitive Damages

"The party seeking discovery has the burden of demonstrating its merits." Clark v. Universal Builders, Inc., 501 F.2d 324, 340 (7th Cir.), cert. denied, 419 U.S. 1070, 95 S. Ct. 657, 42 L. Ed. 2d 666 (1974). In particular, the party interposing an interrogatory has the burden of establishing the relevance of the information sought. See Serina v. Albertson's, Inc., 128 F.R.D. 290, 293 (M.D. Fla. 1989).
Plaintiffs contend that they have demonstrated an evidentiary basis for an award of punitive damages based solely on the Second Pete Youngs Aff. and the Third Tony Youngs Aff. (Motion at 5). Plaintiffs fail to explain how these two affidavits make out a claim warranting punitive damages. Plaintiffs do not even explain what cause of action they believe has been satisfied by the affidavits. Moreover, these affidavits fail to make out the prima facie elements of a cause of action for which punitive damages could be available.
The Amended Complaint includes a claim for punitive damages (Count 6) based on "fraudulent misrepresentations" by the Whitney Defendants, (Amended Complaint at ¶ 56), and on malicious interference with contractual and business relations by Mr. Keller, id. at ¶¶ 57-58. The Second Pete Youngs Aff. and the Third Tony Youngs Aff. fail to contain any allegation regarding a fraudulent -- or even false -- representation by Mr. Whitney. Moreover, these affidavits fail to even mention Mr. Keller, much less demonstrate that he maliciously interfered with some contractual or business relations to which he was a stranger. [FN4]

FN4. In addition, while Plaintiffs' Motion does not argue that the factual basis for their punitive damages claim can be drawn from their Amended Complaint (see Motion at 5), it is clear that the Amended Complaint has failed to state a claim for, inter alia, fraud or malicious interference with contractual or business relations. (See Defendants Motion to Dismiss [Dkt. # 73]).

Plaintiffs' baseless fraud and malicious interference claims are indicative of Plaintiffs' motive in this case. As this Court aptly noted in Clausen:
The Plaintiff wants a ticket to the discovery process. If given such a ticket, the next stage of this litigation is clear. The Plaintiff will request production of every lab test claim submitted by the Defendant over the last ten years. At that point, the Defendant may decide to settle the case to avoid the enormous cost of such discovery and the possible disruption of its ongoing business....
United States ex rel. Clausen v. Laboratory Corp. of Am., 198 F.R.D. 560, 564 (N.D. Ga. 2000).

D. If Discovery Into Defendants' Personal Finances Is Permitted, Such Discovery Should Be Limited To A Statement Of Net Worth

If the Court finds that Plaintiffs have provided sufficient factual support for their punitive damages claims, discovery should be limited solely to Mr. Whitney's and Mr. Keller's net worth. See Skinner v. Aetna Life Ins. Co., 1984 U.S. Dist. LEXIS 19817, *4 (D.D.C. 1984); Van Westrienen v. Americontinental Collection Corp., 189 F.R.D. 440, 441 (D. Or. 1999); Eastman Kodak Credit Corp. v. Gustin, 1990 U.S. Dist. LEXIS 13500, *2 (W.D. Mo. 1990); Chenoweth v. Babcox, 98 F.R.D. 587, 589 (W.D. Pa. 1983); see also Porter v. Ogden, Newell, & Welch, 241 F.3d 1334, 1340 (1 1th Cir. 2001) (allowing discovery of net worth documents when Plaintiffs proffered specific acts that provided a reasonable basis for punitive damages). [FN5]

FN5. The court's conclusions in Ledee are particularly appropriate in this case. There, the court found that interrogatory requests, including a list of all "personal property having a value of $1000 or more," were "manifestly burdensome and oppressive ..." and that "discovery [must be] restricted to the extent necessary to prevent an unreasonable intrusion into the defendant's privacy." Ledee, 225 Ga. App. at 622, 625, 484 S.E.2d 344 at 346, 348.